Carbon Credits, Indonesia

CO2 Emission Reduction ‘Not Working’ for Indonesia

October 24, 2007 (Jakarta Post) – While India and China have seen fortunes moved through their carbon markets, none of Indonesia’s carbon projects have received certification from the United Nations for carbon emission trade with developed nations, an official said Tuesday.  Indonesia has since last year listed nine carbon projects to the UN Executive Board for approval.“No certificates on carbon emission reductions (CERs) have been issued to Indonesia because project hosts have not implemented activities as stated in the clean development mechanism proposal,” Liana Bratasida, assistant minister for global environmental and international cooperation at the state ministry of environment said.

Liana, who is also member of the UN Executive Board for the Clean Development Mechanism (CDM), was a speaker at a discussion on CDM projects Tuesday, attended by dozens of business players.

Carbon credits are measured by CERs which are issued by the UN Executive Board for approved CDM projects.

One CER is equal to one ton of carbon dioxide reduction (CO2) and one ton of CO2 is worth between US$5 and $10 on the carbon market.

Liana said from August, the UN had approved 819 projects worldwide — 34 percent in India and 15 percent in China.

“We are left far behind India and China in terms of CDM projects,” she said.

“The UN has so far issued 77 million CERs globally to countries including India, China and Brazil.

From this figure, 52 million CERs have been sold to Annex I countries, while 1.5 million CERs were given for adaptation funds,” she said.

The CDM is part of commitments made within the Kyoto Protocol and allows developing countries to host projects that would reduce CO2 emissions, including through the use of alternative fuels.

Under the protocol, the host project must allocate 2 percent of approved CERs for an adaptation fund.

The CERs can be traded to 38 developed nations with an obligation to cut carbon emissions as per the Kyoto Protocol.

The Indonesian government has so far approved 24 carbon projects, nine of which are waiting for approval from the UN Executive Board.

The nine projects include PT Petromat Agrotech which is promoting a solar stove project in Aceh; PT Indocement Tunggal Prakarsa Tbk with its alternative fuel project; PT Multimas Nabati Asahan and its bio-mass condensing steam turbine project in Asahan, North Sumatra; PT Murini Sam Sam with a bio-mass condensing steam turbine project in Riau; and PT Indotirta Suaka with a methane capture and combustion from swine manure treatment project in Riau.

The World Bank said the global carbon market trade volume was worth less than $1 billion in 2004.

But the value skyrocketed to $11 billion in 2005 and to more than $30 billion last year.

The state ministry for the environment said Indonesia could supply 2 percent of the global carbon trading market, or equivalent to reducing 125 million tons of CO2.

Liana said the lack of attention from financial institutions had discouraged companies to host carbon projects.

“It is different in India and China where their financial institutions are very active and push local companies to host CDM projects,” she said.

“Local business players should start CDM projects because the Kyoto Protocol will end in 2012.”

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